Friday, March 13, 2009

"The Threat To Capitalism"

Wall Street, in recent times, has become, as a learned phrase has it, very "public relations conscious." Since a speculative collapse can only follow a speculative boom, one might expect that Wall Street would lay a heavy hand on any resurgence of speculation. The Federal Reserve would be asked by bankers and brokers to lift margins to the limit; it would be warned to enforce the requirement sternly against those who might try to borrow on their own stocks and bonds in order to buy more of them. The public would be warned sharply and often of the risks inherent in buying stocks for the rise. Those who persisted, nonetheless, would have no one to blame but themselves. The position of the Stock Exchange, its members, the banks, and the financial community in general would be perfectly clear and as well protected in the event of a further collapse as sound public relations allow.

As noted, all this might logically be expected. However, it did not happen in the go-go years of the late sixties and immediately after -- the years of the performance funds and the conglomerate explosion -- nor will it come to pass. This is not because the instinct for self-preservation in Wall Street is poorly developed. On the contrary, it is probably normal and may be above. But now, as throughout history, financial capacity and political perspicacity are inversely correlated. Long-run salvation by men of business has never been highly regarded if it means disturbance of orderly life and convenience in the present. So inaction will be advocated in the present even though it means deep trouble in the future. Here, at least equally with communism, lies the threat to capitalism. It is what causes men who know that things are going quite wrong to say that things are fundamentally sound.

John Kenneth Galbraith, The Great Crash


Blogger Dave S. said...

"Things are fundamentally sound." Can't say I've heard that in the last six months or so...

3/13/2009 9:17 AM  
Anonymous Anonymous said...

Galbraith has it about right but De Tocqueville was closer: It is not simply the innate conservatism of those who are successful that creates a threat to capitalism but the coupling of that conservatism with inherited wealth, with mechanisms for intergenerational transfer and accumulation of assets, that create a real threat to capitalism and democracy alike. De Tocqueville knew these mechanisms as primogeniture and entail and was pleased that a young United States had, with the exception of some Southern states, rejected them but, in developed countries at least, these mechanisms have now largely been superseded by corporate, trust and tax laws.

In any case Lewis Lapham phrased the underlying sentiment of Galbraith's assessment more pungently: "Most of the ladies and gentlemen who mourn the passing of the nation's leaders wouldn't know a leader if they saw one. If they had the bad luck to come across a leader, they would find out that he might demand something from them, and this impertinence would put an abrupt and indignant end to their wish for his return."

3/13/2009 10:23 AM  
Anonymous Anonymous said...

"So inaction will be advocated in the present even though it means deep trouble in the future." - So much about remembering history, to keep from repeating it. I hope Madoff's conviction isn't the only one. We will know things have changed, when these crooks go to jail. And so far, not really impressed. Are neoliberal policies finally dead?

There was action, but the media is owned by the corporations, which own our politicians, so the corporations and lobbyists worked at eliminating regulations and killing agencies (i.e. SEC), without transparency and media scrutiny. "Stability" means something different on Wall Street (make another billion today), than on Main Street (can I feed my family, put a roof over our heads, and save something for tomorrow - and WS doesn't steal it).

My new hero is Jon Stewart with his CNBC/Jim Cramer interview. Finally, someone with a platform used his voice to tell it like it is. After the tech bubble burst Cramer said he contributed to the problem and was retiring. But that lasted two seconds. Stewart: "These guys companies were on a Sherman’s March through their companies financed by our 401ks and all the incentives of their companies were for short term profit. And they burned the f---ing house down with our money and walked away rich as hell and you guys knew that that was going on."

Just started reading: The Myth of Free Trade and the Secret History of Capitalism. It's interesting to read what actually takes place, rather than just hearing the words regurgitated. The Secretary of Education, Arne Duncan, was on the Charlie Rose show. The plan for education and the future is pretty impressive. Letterman said it a couple of nights ago, it feels like the White House was closed for 8 years and is now just opened.

We may have been shoved to the ground and now on our back, but if we can look up, we can get up ;-)

3/13/2009 4:20 PM  
Anonymous Anonymous said...

When was that written?

3/13/2009 7:30 PM  
Anonymous Anonymous said...

I wish some of you anons would pick a name so we had some history. My only question to all you idiots who post here is...are you still not buying gold? Go ahead and go down with the ship. You've earned it. Lmao

3/13/2009 10:33 PM  
Blogger Jimmy the Saint said...

Anon 4:20,
Arne Duncan isn't all that. I know people will hate hearing this, but the problem with schools is money. Look at the best performing schools. Look at the worst? Where are the worst? Inner cities. Poor rural areas. The poor rural areas are often times run by Republicans(see the South), or corrupt Democrats. The inner cities are run by corporate Democrats. They lower taxes to a great extent to try and attract businesses. The problem is that they then can't afford the proper schools.

3/14/2009 1:37 AM  
Anonymous Anonymous said...


Your gold won't do you any good when your lying dead in the gutter. Us Glenn Beck fans are gonna get you.

3/14/2009 3:14 AM  
Blogger Unknown said...

Nations will become more competitive in these times. If nation preservation is an imperative then there will rise up around the globe allot more nationalism and anti-globalism. Not saying that is a bad or good thing, just seems to me that is the landslide path we are now all sliding down.

3/15/2009 12:26 AM  
Blogger Chris said...

Holy crap. GH and anon, this is supposed to be a place where people discuss, not threaten lives or insult. It is when people like you choose to abandon society that society crumbles, not before.

3/15/2009 3:40 AM  
Anonymous Anonymous said...

Lol Chris, no sweat on my part. Anon...I am very skilled with a rifle. Although my weapon of home defense is a shotgun...and my rots...just so there are no surprises. People think i'm joking but some days I go out to my pond put my gold on the ground, sit my pail down on top of it, and with my rifle in my lap....just hope some of you "glen beck" fans show up. Ahhhhhh its the simple things in the life!

3/15/2009 10:55 PM  
Blogger Mr. Hedley Bowes said...

3/18/2009 2:04 PM  

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